The Securities and Exchange Commission has set the agenda for its August 23 meeting.
ITEM 2: Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews
OFFICE: Division of Investment Management
STAFF: William A. Birdthistle, Sarah G. ten Siethoff, Melissa Harke, Marc Mehrespand, Tom Strumpf, Robert Holowka, Shane Cox, Neema Nassiri
The Commission will consider whether to adopt rules and amendments under the Investment Advisers Act of 1940 (“Advisers Act”) for private fund advisers and whether to adopt amendments to the compliance rule under the Advisers Act.
It would be really unusual for the rule to not be adopted if its on the agenda. The question is “what will be in the final rule?”
The proposed rule in second quarter of 2022 had proposals that could be very problematic:
- Limitations on indemnification for private fund advisers
- Limitations on clawbacks for taxes
- Limitations on different treatment for different investors
- Standards for fee and expense disclosure
- Not allowing existing contractual arrangement to continue if they differ from the rule requirements
The proposed rule was a kitchen sink of items with no unifying theme, other than to try to make private funds more like mutual funds without the liquidity. The rule could have a profound impact on the private fund industry.
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